• Wages need to increase significantly for Japan to sustainably, stably achieve BOJ price target
• Mechanism in which wages, prices rise in tandem needs to become embedded in the economy
• What is most important in raising real wages is to increase labour productivity
• It is hard to directly influence real wages with monetary policy
• It is difficult to set real wage growth as part of monetary policy goal

His comments are something you can pin as the main problem with the Japanese economy over the past two decades. The Covid pandemic was really a black swan event that gave them an outside chance to get out this plight. And the BOJ certainly hopes that they don’t fall back into the rabbit hole again, something like what Switzerland and the SNB is experiencing today.

Besides that, Ueda is also trying to set up the platform for potentially moving on rates again. That as the outcome of the spring wage negotiations come will come into focus in the weeks ahead. This will be a crucial period for the central bank, in perhaps leveraging on that as a key driver to push the policy rate to 1%.

The central bank is arguably up against the clock to get that done now. The timing window looks to be narrowing with Takaichi set to get two new board members on her side soon enough. And you can bet that Ueda & co. knows that to be the case as well.